Wolseley overhaul puts Build Center sale in the pipeline

Plumbing and heating giant Wolseley may sell off UK Build Center as it is identified as one of 19 of the company's 41 divisions which is under-performing.

Build Center, which has 1,500 staff and 160 outlets, joins French plumbing firm Brossette on the list of 'performance builders' earmarked to be offloaded.

These 19 account for 19 per cent of group revenue and 5 per cent of trading profit.

Wolseley, which highlighted the lagging businesses during a recent overhaul by new chief Ian Meakins, pledged it would seek to improve performance before making a decision.

This new strategy is a u-turn from the firm's previous acquisitive tack and will see Wolseley 'operate fewer, larger, related businesses in core geographies.'

Resources will be focused on the remaining 22 divisions which have been labelled as 'growth engines' or 'synergy drivers'.

News of the review came as Wolseley reported a near-halving of interim losses after cost reductions were delivered early.

The Reading-based firm saw pre-tax losses narrow to £261million in the six months to January 31 from £464million a year earlier.

As part of a cost-cutting exercise, Wolsely axed 10,000 jobs last year, and shed more than 1,900 positions in the half-year to January, including 745 in the UK. The firm said today it would continue to keep a tight control on costs.

The plumbing and heating giant suffered acutely as the building
industry collapse in its big markets in North America and Europe
brought demand for its range of radiators, boilers, pipes and other
building materials crashing down with it.

But Wolseley confirmed today that it was seeing 'stabilisation in
many of our markets', with sales declines continuing to ease. The
improvement led the company to raise guidance for full-year trading
profits last month.

Despite its confidence, the firm reported
a fall in revenues of 15.1 per cent to £6.3billion in the first six
months of its year, although it claimed to have improved its market
share across most divisions.

Like-for-like sales are lessening, it said, helped by the recovery in business and easier comparatives.

In
the US division, which accounts for 43 per cent of group revenues,
declines at the Ferguson plumbing and heating chain improved to 18 per
cent from 22.6 per cent in the previous six months.

The UK saw further improvement as like-for-like sales fell 4 per cent
compared with a drop of 13.1 per cent at the end of the last financial
year.

It is the US business that has taken the brunt of the
job losses as Ferguson's workforce was slashed by 30 per cent, or
7,000 positions, over the past two-and-a-half years.

Ian
Meakins, group chief executive, said: 'The results for the first half
reflect good progress on cost reductions which were delivered ahead of
schedule.

'Conditions remain challenging, though we are now seeing stabilisation in many of our markets.'